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Archive for January 1st, 2010

Good news for entrepreneurs and investors, at least the ones who are very sick. As of today, the death tax is repealed. But this silver cloud has a couple of dark linings. First, the tax springs back to life next January 1, so healthy taxpayers are out of luck. Second, the grave-robber politicians may try to reinstate the tax – and even make it retroactive. But as this Wall Street Journal article notes, it is unclear whether such an odious step would survive a legal challenge:

Starting Jan. 1, the estate tax — which can erase nearly half of a wealthy person’s estate — goes away for a year. For families facing end-of-life decisions in the immediate future, the change is making one of life’s most trying episodes only more complex. “I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days,” says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. …The macabre situation stems from 2001, when Congress raised estate-tax exemptions, culminating with the tax’s disappearance next year. However, due to budget constraints, lawmakers didn’t make the change permanent. So the estate tax is due to come back to life in 2011 — at a higher rate and lower exemption. To make it easier on their heirs, some clients are putting provisions into their health-care proxies allowing whoever makes end-of-life medical decisions to consider changes in estate-tax law. …Of course, plenty of taxpayers themselves are eager to live to see the new year. One wealthy, terminally ill real-estate entrepreneur has told his doctors he is determined to live until the law changes. “Whenever he wakes up,” says his lawyer, “He says: ‘What day is it? Is it Jan. 1 yet?’” …Congress could pass an estate tax next year and make it retroactive to Jan. 1. Whether that would withstand a court challenge is a subject of debate in the estate-planning world. …In addition, the composition of the Supreme Court has changed, and some financial advisers believe the court might not again bless a retroactive law. …The situation is causing at least one person to add the prospect of euthanasia to his estate-planning mix, according to Mr. Katzenstein of Proskauer Rose. An elderly, infirm client of his recently asked whether undergoing euthanasia next year in Holland, where it’s legal, might allow his estate to dodge the tax. His answer: Yes.

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Nothing too exciting on the slopes yesterday. The temperature was much warmer, a positively balmy 15 this morning. Off now for the final day of skiing.

Here’s a photo of my oldest sun from a couple of years ago.

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Do Taxes Make People Unhappy?

A column in the Wall Street Journal reports on a new study showing that people tend to be unhappiest in high-tax states. This type of research is very imprecise, to be sure, and it may be that the causality (if any) is that unhappy people vote for higher taxes. The most persuasive part of the column, at the end of the excerpt below, is that people keep moving out of high-tax states and into low-tax states:

Does living in a blue state make people blue? It seems so, according to a new study in Science magazine that ranks states according to their happiness. The study finds that New Yorkers are the unhappiest people in America and their neighbors in Connecticut come in a close second, followed by Michigan, Indiana, New Jersey, California, and Illinois. And the happiest states? Drum roll, please…Louisiana, Hawaii, Florida, Tennessee, and Arizona. Eight of the ten happiest states lean right while eight of the ten unhappiest tilt left. While the study by no means proves that being liberal makes people unhappy, it does reflect some of the unfortunate implications of living in a blue state. …According to the Tax Foundation 2008 analysis, three of the top five unhappiest states—New York, Connecticut and New Jersey—have the highest state-local tax burdens. On the other hand, four of the top five happiest states—Louisiana, Florida, Tennessee and Arizona—are among the states with the lowest state-local tax burdens. True, correlation doesn’t prove causation, and high taxes alone don’t always make people miserable, but there’s something going on here. …Many liberal state governments like those in Albany, Trenton and Sacramento are spending more and more on entitlement programs and public employee pensions, racking up more and more debt, and imposing more and more taxes to pay for it all—while ignoring their taxpayers’ needs. Taxpayers, however, aren’t just getting unhappy. They’re getting out. United Van Lines’ 2009 annual study shows that New York, New Jersey, Michigan and Illinois are among the states with the highest outbound migration while Alabama and Tennessee are among the states with the highest inbound migration. …Taxes may not be the root of all unhappiness, but they do result in some very sad citizens.

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